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California VA Home Loan Requirements Explained

The VA home loan program is incredibly popular among California military members and veterans, and for good reason. It offers a number of impressive benefits, including a zero down payment. Today, we will explore the minimum requirements for a California VA loan.

Minimum Requirements for a California VA Loan

The good news is that the VA loan program is one of the more flexible mortgage financing options available. This is due to the structure of the program.

VA loans are partially guaranteed by the federal government, which gives mortgage lenders an added layer of protection against borrower default. Because of this (and other factors), VA-guaranteed home loans have some of the most flexible requirements of any mortgage program.

Here are some of the things you might need to qualify for the program:

1. COE Showing Program Eligibility

One of the first things you’ll need when applying for a VA loan in California is the Certificate of Eligibility, or COE. This government document shows lenders that you are eligible for the program, based on the requirements established by the Department of Veterans Affairs.

You can request this document on your own, through the VA website, or have a mortgage lender do it for you. Please contact us it would like assistance with this initial step in the process.

2. Sufficient Income to Cover Your Monthly Payments

Having enough income to keep up with your monthly payments is one of the most important requirements for a California VA loan. And there’s a good reason for this. The last thing you want to do is get into a situation where you cannot afford to cover your monthly debts.

To meet this California VA loan requirement, you’ll have to show documentation of your income. This can be done by providing pay stubs, tax returns, and other financial documents. Please contact us if you have questions about this step.

3. A Good (but Not ‘Perfect’) Credit Score

Having a decent credit score is another California VA loan requirement. But you don’t necessarily need¬†perfect credit to qualify for this particular program.

In fact, VA loans tend to be more forgiving when it comes to the borrower’s credit score. We mentioned the reason for this earlier. Government-backed mortgage programs, like VA and FHA, tend to be more flexible when it comes to credit score requirements and other criteria.

The Department of Veterans Affairs does not impose a minimum credit-score requirement for California VA loans. They leave it up to the bank or mortgage lender to determine who is “creditworthy.” So there is no hard-and-fast rule as to what credit score you need to qualify for a VA loan.

Generally speaking, a score of 600 or higher will put you in a good position — especially if you meet all of the other requirements for this mortgage program. But again, that number is not set in stone. Even if your credit score falls below that threshold, it’s still worth your time to apply for the program. Exceptions can be made for borrowers who are otherwise well qualified for a VA loan.

4. A Manageable Level of Debt

Debt is another important requirement for California VA home loans. This is true for all mortgage programs. In this context, we are talking about recurring debts — the kind you have to pay each month. The kind that show up on your credit reports.

The bottom line here is that you must have sufficient income to cover all of your recurring debts, including the addition of a mortgage loan. Lenders use something known as the debt-to-income ratio, or DTI, to make this determination.

As with credit scores, there is not a single rule or threshold for debt-to-income ratios. The overall goal here is to ensure that the borrower is not taking on too much additional debt, with the home loan. Carrying too much debt can lead to financial hardship down the road. DTI evaluations can help prevent such hardship. And that’s in everyone’s best interest.

5. A Down Payment Is Not Required in Most Cases

Here’s more good news. The down payment is not a requirement for a California VA loan. In fact, the whole idea behind this program is to help military members and veterans purchase a home without making a down payment.

This is one of the many benefits this program offers for eligible borrowers. Most other mortgage programs have some kind of down payment requirement, but California VA loans do not. This program allows you to obtain 100% financing, thereby eliminating the need for an out-of-pocket investment.

Conclusion and Next Steps

This article explains some of the California VA loan requirements you might encounter when applying for this program. There are other requirements as well, including an evaluation of the house itself. But we’ve omitted those for the sake of simplicity.

At Bridgepoint Funding, we have helped many military members and veterans qualify for this program. We are passionate about VA loans because they reward our military service members. Please contact us if you have any questions about California VA loan requirements, or if you would like to apply for the program.

Mike Trejo

Mike Trejo is a Bay Area mortgage broker with 20+ years of knowledge and experience.

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